If you are a small business owner, financial reporting could soon get a little easier.
The Government recently announced plans to simplify reporting requirements for micro-entities and small and medium-sized enterprises (SMEs), with new legislation expected by the end of the year.
These changes promise relief for small businesses, both in terms of administrative workload and cost savings.
Jonathan Reynolds, Secretary of State for Business and Trade, outlined the impact of the reforms, stating: “I can confirm that my department will lay legislation by the end of the year that will save companies £240m per year by removing redundant reporting requirements and uplifting the monetary size thresholds for micro-entities, small and medium-sized companies, as well as making technical fixes to the UK’s audit framework. The changes will benefit up to 132,000 companies who will move to a smaller size category, with lighter-touch accounting and reporting requirements more proportionate to their size. These changes are the first step toward modernising the UK’s reporting framework, so it is simpler and better for business, supporting the Government’s aim to have the highest sustained growth in the G7.”
What is changing?
Under the proposed legislation, companies will see a rise in the monetary thresholds that determine their size category, enabling more businesses to qualify as micro-entities or small companies. This change will allow these businesses to benefit from:
- Reduced requirements for filing detailed financial statements with Companies House
- Fewer obligations for audits and other compliance-related services.
- Reporting obligations better matched with a company’s scale and complexity.
For businesses already juggling tight margins and limited resources, these changes come as welcome news.
How does this affect you?
If your business falls under the micro-entity, small, or medium-sized categories, this could mean lighter compliance work moving forward.
However, you will need to understand the implications for your reporting processes.
Key areas to consider include:
- Eligibility – Review your company’s financial thresholds to see if you qualify for a smaller size category under the new rules.
- Statutory registers – While reporting requirements may be simplified, maintaining accurate statutory records remains essential.
- Audit exemptions – Businesses transitioning to a smaller size category may no longer require audits, but you should assess whether voluntary audits could still be beneficial.
Preparing for the updates
While the changes are designed to benefit businesses, transitioning to the new framework may require some preparation.
Ensuring your company records are up to date, filing all necessary documents correctly, and understanding your obligations under the revised framework will be critical.
